SENIORFINANCES
SPECIALIZING IN INVESTMENT MANAGEMENT AND ASSET PRESERVATION THOMAS J. O’CONNELL CERTIFIED SENIOR ADVISOR PUBLISHER FOR MATURE INVESTORS MARCH 2007
qualified trust, distributions must be paid out over the Particulars Of The Multilife expectancy of the oldest beneficiary. With this in Generational IRA mind, you could jeopardize you ability to stretch out The stretch IRA concept is a wealth-transfer strategy distributions to your grandchildren if you name a trust that can help you extend the period of tax-deferred as the beneficiary. earnings on your retirement assets. After the owner of 2. Discuss your plans with an experienced the IRA dies, the beneficiaries will also have the advisor. The benefits of this strategy could also be longest allowable period of tax-deferral on the jeopardized if the IRA is not set up properly. required distributions of the IRA assets. This strategy Therefore, you need to speak with an experienced tax can allow distributions from your retirement assets to advisor who has worked with this strategy before. be extended over several generations. Because of this, your family could save significant dollars in income 3. Establish and maintain separate accounts taxes over their lifetimes. for your beneficiaries. If you have two or more A stretch IRA strategy can be established at any time, as long as you have named an individual person as the beneficiary. It’s also important to name an individual person as a contingent beneficiary in case your primary beneficiary predeceases you. If set up correctly, your beneficiaries should be able to take their required IRA distributions over their individual life expectancies. However, there are a number of steps that need to be followed to put this strategy in place. These steps include the following: beneficiaries, you need to set up a separate account for each one of them. You should also designate a certain percentage of you IRA assets to each of your beneficiaries. By doing this, each beneficiary can then choose to have their share distributed over their individual life expectancy. 4. Inform your beneficiaries of your plans. You should also let your beneficiaries know about their future interest in your account when you pass away.
There are a couple of other things to keep in mind. The names of the account holder and the 1. Selection of individual beneficiaries. As individual beneficiary must appear on the IRA previously mentioned, you will need to designate an account, and the beneficiary distributions must begin individual beneficiary. Although there might be no later than Dec. 31 of the year after the death of the certain reasons for naming a trust as a beneficiary account holder. If these rules are not followed, the (e.g., asset protection for the beneficiaries), you funds from the IRA could be exposed to a significant should keep in mind that you will jeopardize the income tax penalty for missing the required mandatory ability to use this strategy if you do it. Even with a distribution (50% of the distribution that should have
been taken). On a final note, it should be remembered that this strategy may not be suitable for everyone. For example, if you think that you will need access to your IRA money to meet your daily living needs during retirement, then this strategy might not help you. Do you want to know more about the benefits and restrictions of the stretch IRA strategy? Check the enclosed coupon for more details.
As federal and state tax rules are subject to frequent changes, you should consult with a qualified tax advisor prior to making any investment purchase decisions.
condition if they're appraised at more than $500. Second, beginning in tax year 2007, you won’t be permitted to deduct monetary contributions unless you retain either a bank record that supports the contribution (for example, a cancelled check) or a written statement from the charity that meets tax-law requirements. What does that mean? Once the new rule takes effect, you won't get any deductions for undocumented cash contributions (such as money given to the homeless or placed in church collections plates).
Are You At Risk For Outliving Your Money?
Retirees
Good News If You Want To Make A Contribution
On August 17, President Bush signed the Pension Protection Act of 2006 (PPA), which includes important tax changes that will directly affect many individuals — including those who make charitable contributions. Some of the new rules are taxpayerfriendly, but some are not. First, the good news. Beginning immediately, and effective in 2006 and 2007, seniors can make charitable contributions directly out of their Individual Retirement Accounts (IRAs). What? Yes! If you're 70½ or older, you can now arrange to contribute money directly from your traditional IRA or a Roth IRA to tax-exempt charities. Normally, you’d pay federal income taxes on that distribution; but when the distribution is a qualified charitable distribution — which are payments made by your IRA trustee directly to a qualified public charity — you won’t. This is great news for relatively wealthy seniors who don’t itemize. But there are some important points to note: You cannot donate more than $100,000 in either 2006 or 2007. The money cannot pass through your hands. And, since the tax-free treatment equates to a 100 percent write-off, you can’t take an itemized deduction for the same qualified charitable distribution. Now for the bad news. First, as of August 17, 2006, you can no longer claim deductions for used clothing and household goods (which include furniture, electronics, appliances, etc.) that are not in "good" condition or better. There is one exception, however: You can As federal and state tax rules are subject to deduct single items that are in "less than good" frequent changes, you should consult with a
sometimes add their child’s name to their accounts in an effort to transfer ownership and remove assets from their estate. But doing so may cause problems later. First, you aren’t realizing any tax savings by putting your child's name on a bank or brokerage account—i.e., registering it as joint tenants with rights of survivorship (JTWROS). JTWROS assets bypass the probate court process upon your death and go directly to the surviving joint tenant, so there will be fewer time delays and court costs. However, the account will still be included in your estate. Moreover, adding your child’s name to your account could expose you to legal woes—and leave you without any money for retirement. Let’s say you’re getting older, and you aren’t able to manage your affairs well, so you add your adult child’s name to your bank and brokerage accounts. Your child can write checks on the accounts, and if you die, he or she will inherit the accounts, avoiding probate. But there could be problems. First, since assets registered as JTWROS are owned jointly during your lifetime, they thus can be accessed (and liquidated!) by your joint tenant while you are living. In other words, your child could potentially liquidate the account without your consent. Perhaps more worrisome: If your child gets sued, you could lose all of your money. And don’t think you can change the title of the assets once legal proceedings begin—that’s called fraudulent conveyance, and it a big legal no-no. A better option may be a durable power of attorney, which gives your child access to your accounts without placing the assets at risk. Call me or complete the attached reply coupon to request some additional information.
qualified tax advisor prior to making any investment purchase decisions.
Securities offered through Comprehensive Asset Management & Servicing, Inc., Member NASD/SIPC, 2001 Route 46, Suite 506, Parsippany, NJ 07054, (973) 394-0404 Investment advisory services offered through Comprehensive Capital Management, Inc., 2001 Route 46, Suite 506, Parsippany, NJ 07054, (973) 394-0404
Our next scheduled Senior Financial Survival Workshops are: March 14th Biagio’s Ristorante 299 Paramus Road Paramus, NJ 07652 Workshop begins at 3:00PM. Arrive at the restaurant by 2:30PM Late Arrivals will not be admitted March 15th Steak & Ale Restaurant 335 Route 17 South Upper Saddle River, NJ 07458 Workshop begins at 10:00AM. Arrive at the restaurant by 9:30AM Late Arrivals will not be admitted March 21st Biagio’s Ristorante 299 Paramus Road Paramus, NJ 07652 Workshop begins at 10:00AM. Arrive at the restaurant by 9:30AM Late Arrivals will not be admitted March 22nd Steak & Ale Restaurant 335 Route 17 South Upper Saddle River, NJ 07458Workshop begins at 10:00AM. Arrive at the restaurant by 9:30AM Late Arrivals will not be admitted
Please call 1-800-765-3817 to make a reservation. Important: The restaurants mentioned above can not provide you with a reservation or other information about the workshop. Please call the 800 number listed for any and all information.
Get this Valuable Information
Name Address City, State, Zip Phone # Mail back to: Senior Wealth Solutions, LLC 2001 Route 46, Suite 506 Parsippany, NJ 07054
Please contact me about the information on these items mentioned in your newsletter: Can I have my IRA reviewed to insure that the stretch to my beneficiaries will occur? How can I get the maximum tax benefit from charitable contributions? I have assets titled with my children’s names—how can I fix the potential problems? I would like to have a copy of these booklets (enclose $1 for each)
Avoid Mistakes in Buying Long-Term Care Insurance Annuity Owner Opportunities (a must read if you own an annuity) Mistakes in Selecting Mutual Funds Six Ways Retirees Can Cut Taxes IRA Distribution Mistakes CD Shoppers’ Guide
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